If you're a real estate agent, a first-time home buyer, or a homeowner who's considering selling or refinancing, it's important to know and understand the trends that will shape the real estate market for the next year. Here are the top real estate trends to pay attention to for 2017.
Mortgages are Rising
The price of homes rose this past year, and prices are expected to continue rising this upcoming year. Part of the reason for increased house prices is because builders are only building homes at around sixty percent of their usual rates, meaning that inventory is tighter than usual. The low amount of housing is driving up prices. If you're buying, this means you'll likely have to pay more if you buy a house in 2017, but if you are already a home owner this means that you will gain home equity and increase the net worth of your assets.
Along with rising house prices are rising mortgage rates. Financing rates shot up after the election in November, and it's been projected that rates will continue to rise through much of next year. This means that if you're buying, you'll want to get your rate locked down as soon as possible, and if you want to refinance, it's in your best interest to do so early in the year, rather than waiting until fall or winter.
It's Easier to Buy
While mortgage rates are going up, it's actually becoming easier for borrowers to secure a mortgage. Banks have become more willing to work with borrowers, and likely will lower their required credit scores throughout the next year. With increasing interest rates, less home owners will want to refinance, and banks will need to give out more new loans to make up the difference.
Mortgages that are easier to acquire combined with a more welcoming attitude from the market and banks will make it easier for first time buyers. Home builders are investing in town homes and other models that first-time buyers who are single or childless will gravitate to. So, if you are ready to buy but don't want a house, there are other options available to you.
There has been a decline of foreign buyers, institutional investors, and all cash buyers. Previously, cash buyers were at an all-time high, but it's expected that the decrease will continue until they reach a normal rate or lower. This is a result of several factors, including rising home prices and interest rates. This is good news for some buyers, who will have less competition for entry level homes from those who can buy houses outright.
Homes are Getting Smaller
This year was the first since the recession that new home sizes have decreased, but this trend is likely to continue into 2017. The desire to live close to city cultural areas means less land to develop on, and has resulted in smaller houses. Decreased house sizes is also the result of building companies focusing on first time buyers who can't afford the larger houses. As builders expand into the underutilized market of first time buyers, average home size will continue to get smaller.
Rent Increases are Slowing
While apartments that are located in cities will likely continue to increase their rent over the next year, it will be at a slower pace than in years before. This is because builders are finally catching up to the inventory needed to house everyone who rents rather than owns. As more apartments become available, leasing offices won't be able to increase prices drastically without losing renters, who will have new options to chose from.
Jane Adams is a passionate writer from London. She loves to write about marketing strategies and regional languages. Currently, she works for Localdig.